Why do we have a system? What is the purpose of Law and the Legal System?
We have a system because we want to be safe; and we want to be certain.
As business people and community members, we want to have sufficient predictability so that our expectations are reasonably assured. We need to be able to plan and venture with well-founded confidence that we will have a meaningful role in responding to changing circumstances and will have a powerful voice and be treated fairly should conflict arise. We need a contract so that we know who will do what and when, and to set out the promises to which we each are bound.
Simply put, we need to know the rules.
Rules – by definition – must be enforceable; otherwise, they aren’t really rules, eh? We’d like rules also to be realistic. So, we negotiate for ‘reasonable’ or ‘realistic’ rules and write them into our contracts; then we rely on the legal system to enforce those rules.
Sadly, the expense, inefficiency, and the arcane processes of the conventional system make enforcement more of an aspiration than a practical reality. Even when the courts do hand down a decision, the focus is on applying legal precedent rather than what’s best for the particular parties or their specific business venture. Court rulings often serve ‘the Law’ at the expense of fully or adequately addressing the unique context and complexity of the parties’ predicament.
How can we make enforceability real and workable? What could we do differently to create the safety and certainty that are largely un-realized when we take the conventional approach?
Rules and Responsiveness – Striking a balance
Rules have a limited capacity to engage the full complexity of a dynamic marketplace or the flow and force of business (and human) relationships. The important interests of one or both parties can be subverted when contract terms are subjected to purely legalistic interpretation.
Our quandary is that we are looking for a way to create enough certainty and predictability without sacrificing the flexibility necessary for agile, adaptive response to crisis or to evolving circumstances. Could there be something that is safer than rules? Maybe something in addition to the rules? Something that serves as a back-up to the rules – to add the necessary flexibility and adaptability?
The court system was intended to serve this function; but it can’t handle the complexity of real life on a case-by-case basis.
Over the course of a litigation, individual cases are trimmed of their complexity and framed to fit one of a limited number of officially recognized patterns — precedents. This trimming and re-framing is the meat of the lawyers’ and judges’ work. Once the designated pattern type is decided, a model legal outcome associated with that pattern type is pulled from legal precedent and imposed on the situation regardless of whether the prescribed outcome is actually beneficial or wise in the particular context of the real-life parties and circumstances. Abstraction and tradition trump context, reality, and wisdom.
But what if each contract had a built-in, ready-made mechanism for addressing conflict or change – one capable of encompassing and engaging the full complexity of the situation for those particular parties in that particular place and time? If we had a viable process or structure that the parties could agree to and manage for themselves, how would it interface with – even (dare we hope) harness – the larger existing system? We’d need a new frame of reference to start with; and we’d need to build a new framework for negotiation and enforcement.
‘Discovering Agreement’ offers this new perspective and helps parties create frameworks designed to generate and sustain the benefits of their contractual relationships.
A New Frame
Contract law is meant to protect the autonomy of the parties to create their own proprietary governance system. Courts often refer to the contract document as the parties’ ‘private law.’ So long as the contractual terms are not illegal, the court is charged with applying the parties’ private laws to the situation at hand.
As a result, when drafting contractual language, lawyers and business people try to predict eventualities – to imagine what might happen in the future for the business endeavour. Then we negotiate and establish rules for dealing with the hypotheticals we’ve imagined, agreeing to be bound by the ‘laws’ we’ve created. The contract becomes a tool for retribution, a weapons cache the parties will use mainly to attack and defend their respective positions when they are in crisis or disagreement.
We can look at the negotiation process another way – reframe our perspective. Instead of designing a system of retribution, what if we approach the contract negotiation as a way to design and implement our ideal relationship?
The Basic Framework
When using the Discovering Agreement approach, we begin by asking what really matters to each party. Why are we doing the deal? Why are we doing it with this deal-partner? What will be key to our satisfaction in conducting the ongoing relationship, and in order for the effort to be worth our while? From this exploration, we can develop a written expression that embodies the core values, shared vision, and shared mission of the parties for themselves and their co-endeavour. The declaration of Vision-Mission-Values can then be added to the opening ‘recitations’ in the contract – right along with legal names and addresses.
With this foundation in place, we next look for the assumptions upon which the parties are basing their decisions and examine those to see (a) if the assumptions are true and (b) whether they are the foundations the parties want for their decision-making. For instance, we consider assumptions about who will be the decision-maker if a dispute arises. The default setting is the court-system. Some contracts substitute an arbitration system, or even a mediation system. Is that how we want it? Do we truly know (and like) the way the chosen system works? What would we prefer? What would be ideal?
The parties build a relationship first by calibrating and aligning their vision-mission-values, then by consciously choosing a structure for conducting conversations when tensions/change/disagreements arise and decisions must be made. We use the contractual terms to create a framework for sustaining our beneficial relationship. Once we have the guiding principles and framework in place, it becomes a much more creative and enjoyable task to draft our action plan (agree on deal points, milestones, and the like).
Rules and Responsiveness: Striking a Balance
We write contracts for safety. The conventional approach is to try and create certainty — a secure, knowable world so that we can be safe. The truth is, the only certainty is that things change. Aligned responsiveness is far safer than the ‘certainty’ of what we hope are stable, reliable predictions. Working from a ‘Discovering Agreement’ perspective, it is possible to draft contracts that serve our need for realistic and enforceable rules, as well as providing agility for effective response to crisis or change.